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Nissan no-show irks judge

Courting trouble: Queensland dealership Highway Nissan is fighting its termination by Nissan.

Factory stays away from dealer sacking injunction

General News logo23 Feb 2010

THE attempted non-renewal by Nissan Australia of a franchise agreement with Highway Nissan in Springwood, in Brisbane’s south, has ended up in the Supreme Court of Victoria with Nissan copping a spray from the judge for not being represented at the hearing.

Lawyers acting for the Highway Nissan succeeded in getting an injunction preventing Nissan from ending the dealer agreement.

GoAuto has been told that Nissan had attempted to terminate a dealer relationship of 22 years standing, effectively with less than a week’s notice.

Nissan alleged the dealer had not met the requirements to get a renewal of the dealership agreement.

When a dealer reaches the end of the Nissan dealer agreement period, there is no promise that the agreement will be renewed. The dealer that meets certain requirements in terms of sales, customer satisfaction index (CSI) and other performance standards, will be renewed. But if a dealer does not meet the requirements the agreement is not renewed.

History shows that a dealer will automatically be renewed provided they are not a non-performer with a history of not meeting performance levels.

But Nissan in 2008, and other distributors in recent years, have inserted specific provisions to remove that expectation and to make it absolutely clear that there is no expectation unless they meet certain absolute performance key performance indicators (KPIs).

 center imageIn the case of Highway Nissan, the dealer realised in November that his CSI scores for November were below the requirement and that he might not be able build them up again by the end of December.

The data for December is not published until mid January but before the data was published Nissan wrote to him and told him that if his score was below the mark “these are the actions you must take in terms of ending our relationship” with instruction what to do about signage, stock etc.

It stated that, as of January 31, Highway Nissan would no longer be a Nissan dealer.

Highway Nissan got the CSI result in the last week of January effectively only having days before Nissan required that it close its doors.

On January 29, the matter went before Justice Judd in the commercial division of the Victorian Supreme Court, and Highway Nissan successfully obtained an injunction prevention the ending of the dealer agreement.

Justice Judd said that there was “a serious question to be tried as to whether Nissan had validly notified the dealer of the relevant sales satisfaction targets, or information about those targets, as would enable the dealer in performance of its obligations under the agreement, to understand precisely what was expected of it”.

The judge also said there were other questions of whether the agreement should be exposed to early termination if Highway Nissan had achieved at least two of the targets, whether Nissan had breached the franchises code or whether Nissan had breached the Trade Practices Act.

He granted the injunction and said he was satisfied there was “a serious question to be tried”.

But Justice Judd issued a stinging rebuke to Nissan for “not seeing fit” to be represented by counsel.

“It has a solicitor present in court, from the firm Minter Ellison, who informed the court that she had no instructions in relation to the matter. Her only task was to report back to Nissan on the outcome of the application. Such an approach does not assist the efficient disposition of the business of the court. I am surprised that Nissan has not sought to participate in this hearing.”

He said that if Nissan had attended it might have been possible to set a hearing date that could have avoided unnecessary attendance of the parties at the court the following week.

The parties will be back in court this Friday.

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